Tuesday, May 13, 2008

For An Income Tax Labor Depletion Allowance

I received a notice from the IRS that all of my (and Jan's) income tax for 2007 will be refunded. This is the "keep the incumbent Congress members in office" tax refund of 2008. Supposedly to stimulate an economy that is mainly suffering from the after-effects of over-stimulation.

On the other hand, since I work freelance and Jan sells jewelry out of our home, we did pay over $5000 in Social Security taxes. If you are self-employed you get to pay both halves of the SS tax that are usually split between employers and employees.

But that is supposed to be a pension plan. So for 2007, my wife and I, middle-income people, paid not a penny for the war against the people of Iraq, Afghanistan, Somalia, etc. No dough towards foreign aid. No subsidies for farming corporations. Nothing for food stamps, other federal welfare payments, or federal subsidies for education. No money for earmark boondoggles. But all that money was spent anyway, piling up in the federal deficit.

Sounds like Gun and Butter to me. The phrase means spending money on a war without cutting back on domestic consumption. Hitler is famous for doing that during World War II. Women were not asked to work in the war effort, and plenty of food was available for German house wives until the Russians were grinding up the Polish breadbasket and German husbands along with it.

Every nation that has done the guns and butter routine for very long has ended up bankrupt, with little military power and not much butter. So unless history is not prededent in this case, that is where the United States is heading.

The election over, I'll almost certainly go back to owing taxes for 2008. Plus there is that big old, scary national debt that at the very least needs to have its interest paid.

Which made me think of another case of not paying taxes in the good ol' United States of America. Between around 1920 and 1990 there was something called the oil depletion allowance. The theory behind it was this. There is oil in the ground, and someone owns it. It is worth money setting there in the ground. If you take it out of the ground, and sell it, you really have not made any money. Because the money just compensates for the lessening of the value of the oil in the ground. No income, no income tax. Simple. And fair as the sky is blue. Own oil land and become a multi-millionaire, even if you bought the land for $1 per acre, and you owe no federal income tax.

We ordinary people born to ordinary parents who are renters or maybe own some ordinary, non-oil holding land, should get a labor depletion allowance against income tax.

The reasoning here is that each person born has a certain lifelong capacity for labor. As you labor, you are depleting that capacity. So you are not actually netting any money. Any pay you get just offsets your total lifetime money earning ability.

Write your congressperson today, while its election year. Demand a labor depreciation allowance against income tax.

What is good enough for an oil man is good enough for me.

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